Panay Company has a cycle of 3 days, uses a Raw and In Process Account (RIP) and charges all conversion costs to cost of goods sold. At the end of each month, all inventories are counted, conversion costs components are estimated and inventory account balances are adjusted. Raw material cost is backflushed from Raw and in Process (RIP) Account to finished goods. The following information is provided for the month of June: Beginning Balance of RIP account, including Php 1,000 conversion cost 5,000.00; Beginning Balance of Finished goods account including Php 6,000.00 conversion cost Php 10,000.00; Raw materials received on credit Php 400,000.00; Direct Labor cost Php 300,000.00; Factory overhead applied Php 500,000.00; Ending RIP inventory per physical count, including Php 7,000.00 conversion cost Php 20,000.00; Ending Finished Goods inventory per physical count, including Php 4,000.00 conversion cost Php 6,000.00 What is the amount of direct materials backflushed from RIP to Finished Goods? *
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
8. Panay Company has a cycle of 3 days, uses a Raw and In Process Account (RIP) and charges all conversion costs to cost of goods sold. At the end of each month, all inventories are counted, conversion costs components are estimated and inventory account balances are adjusted. Raw material cost is backflushed from Raw and in Process (RIP) Account to finished goods. The following information is provided for the month of June: Beginning Balance of RIP account, including Php 1,000 conversion cost 5,000.00; Beginning Balance of Finished goods account including Php 6,000.00 conversion cost Php 10,000.00; Raw materials received on credit Php 400,000.00; Direct Labor cost Php 300,000.00; Factory overhead applied Php 500,000.00; Ending RIP inventory per physical count, including Php 7,000.00 conversion cost Php 20,000.00; Ending Finished Goods inventory per physical count, including Php 4,000.00 conversion cost Php 6,000.00
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